Jim Simons And His Merry Band Of Math Nerds Beating Investors Off With A Stick

How's Jim's a$$ taste?
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By Gert-Martin Greuel [CC BY-SA 2.0 de], via Wikimedia Commons

via Wikimedia Commons

Time was, being a hedge fund manager was an exercise in raising billions of dollars, charging 2&20 (or 3&50), telling investors to f*ck off if they didn't like it, propping one's feet up on the desk, and watching from binoculars as a fleet of dump trucks filled with money pulled up to the lobby and asked "Where should we leave it" daily. Lately, though, it's been hard. Investors suddenly want justifications for high fees for crappy performance. Once mighty firms are laying off traders. Navigating the markets feels like going to war. Relative to the old days, it sucks to be a hedge fund manager.* Unless you're Renaissance Technologies founder Jim Simons, who technically retired in 2010 and is still destroying the competition.

The hedge-fund firm, which relies on closely held computer models and algorithms, has staged a comeback after an uneven spell, with its funds posting market-beating gains for more than the past year. Now they are getting a cash influx, even as rivals suffer withdrawals. Renaissance attracted more than $7 billion in new investor money over the past year from wealthy clients of UBS Group AG, Citigroup Inc. and others, according to people close to the matter. Renaissance now manages more than $36 billion, up from $27 billion a year ago, even after returning about $1 billion from its signature Medallion fund, which is closed to investors. The success is the latest sign that some quantitative funds are beating traditional investors.

Another reason it's good to be Jim, besides his computers getting the credit they deserve?

About $22.65 billion of Renaissance’s assets are owned by the firm’s founder, Jim Simons, and “Renaissance-related capital,” according to investor documents.

Renaissance Technologies: Hedge Fund on a $7 Billion Winning Streak [WSJ]

*Relative to reality, it's still a good gig.

Related

This Is A Story About A Guy Telling A Random Dude On The Street "I'm actually building a hedge fund that uses quantitative strategies to pick stocks" And That Dude Actually Being Jim Simons

Something we've long-maintained around the Dealbreaker office is that hedge fund manager Jim Simons would make a great fairy godmother, what with his soothing voice, white beard, and the fact that he's really just a lovable math teacher who happened to make a zillion dollars by tinkering away the computers in his garage and would be happy to lend the powers of his magic cigarette wand to those in need.  So we were extremely pleased to have our attention brought to an anecdote from Scott Patterson's Dark Pools, in which Simons seems to appear out of nowhere, just like a FGM would, sprinkles unexpected gifts on a young man and woman (of both hope* and nicotine), and then disappears as quickly as he came via golden carriage. (We also appreciate that Simons is the kind of FGM that will laugh in your face as you explain to him what a quant fund is, not realizing he's got some experience there.) One day in the summer of 2006, Fleiss was having lunch outdoors with his girlfriend at a restaurant on the Upper East Side. As they chatted in the sun after their meal, an elderly man dressed in a modest suit walked out of the restaurant and lit up a cigarette. Fleiss's girlfriend bummed a smoke off him, and they began to chat. "So what do you do?" he asked Fleiss. "I'm actually building a hedge fund that uses quantitative strategies to pick stocks," he said. "Oh really?" The man laughed. "Where did you go to school?" "Amherst." "Good school. You know, I'm also in the quant biz." Fleiss asked where he worked, but the man wouldn't answer. But Fleiss kept pushing. Finally, the man said he ran a fund called Renaissance Technologies. Fleiss nearly fell out of his chair. He wanted to talk more, but a gleaming Bentley had just pulled to the curb and Jim Simons quickly disappeared into it. Dark Pools [Scott Patterson] Related: Who Wants to Become A Rebellion Research Investor? *That some of his quant-i-ness would rub off on the guy.